If your property was originally a 1031 exchange please review this IRS link for further details. When you report this sale of this property, you must use the basis of the property given up minus adjustments. The adjustments include the deferred gain, and any additional gain realized since the purchase of the replacement property, This is something that you need to keep track of.
Otherwise, since this doesn't involve an additional like-kind exchange, you will not report in your Turbo Tax that this was originally a 1031 exchange. Just be sure to include in your basis the original cost of your original instead of home minus the amount of the deferred gain. This may result in more of a taxable gain this year but as the old adage goes, pay me know or pay me later.
To properly report this as Sale of Business property and if you are in Turbo Tax Online, you will need to report this as sale of business property.
- Go to federal>wages and income>see all income>other business situations>Sale of Business Property>start
- Next screen you will say none of the above You will see an entry there for like-kind exchanges but you will not select that because this current transaction is not a like kind-exchange.
- Then it will ask you questions about this transactions. Just follow the prompts
If you are using Turbo Tax software the menu path is similar except where it says other business situations in the online version, Sales of Business Property will be listed under Business items in the software version.
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